Buy direct

With regards to Bill's post about Disney laughing to the bank, I believe he was engaging in a bit of hyperbole. But, if you look at the thinking behind his statement, it's not entirely flawed. People are paying $145 pp direct for AKV while others are buying it resale for $65pp. And despite what DVD would have you believe, there is not that significant a difference between direct and resale points. So is it entirely unfair to suggest that people who knowingly (or unknowingly) pay double for AKV direct points are a bit foolish? From a financial standpoint, it does seem like a foolish move. But I would not go so far as to call anybody a fool.

Click to expand...

OK, Perhaps I was slightly over sensitive to Bill's comment. I have spent a lot of time on DVC and this decision has taken more effort then I care to admit. I am extremely analytical and really hate the picture of the naive foolish buyer.

As far as AKV, as a direct buyer, my concern would be the spread between the early direct buyer price and my buy-in price because that is true apples to apples comparison for someone buying direct. With AKV, that spread might now be so large resale might be the best option if I absolutely love AKV. However, I might consider what other direct options are available were the spread from opening price and now is reasonable. If you go down this track, you end up needing to see the info about VGF for potentially your best direct option at this time because all the current resorts given all the price increases have a large spread from opening to today. Existing resorts do present poor direct options right now, but I would still measure "spread" between early buy in price to today to rate the best values. As you point out, this has also created the largest spread between resale and direct as well (that is just not the measure I am using).

So, we might get to the same place, just using a direct bias in my case. In fact, the way Disney has done this, new resorts might be the only thing left for direct buyers needing anything more then a few points on one of their existing contracts that spend anytime trying to really analyze their options. Even these new resorts present new challenges with high entry costs and high point charts. It is not an easy world for a direct buyer. Just do not call us foolish

So I am trying to make the best direct purchase. I am spending a lot of time trying to do it. I strongly believe people considering DVC need this insight as well and not just a "buy resale because direct does not make sense" approach.

Here's a something to ponder. Lets assume that Disney can't ever get rid of the resale market. Is it in their best interests to have resale sell as close to direct prices as possible or is it best for them to have resale prices as low as possible? Can they even influence the price of resale? How small a discount will a resale buyer want before they just buy direct instead.

Instead of making the jump from resale prices to direct prices why not increase your resale offer a few dollars per point above what you have been offering to Increase your chances of success and still make great savings

Disney needs the resale market to obtain points back via ROFR so they can sell old resorts as there is still a demand for them. Sure, if they eliminated the resale market, they could obtain more points back via foreclosure but does Disney really want to go through the hassle of an increase in foreclosures or having to take back every contract vs. pick & choose via ROFR???

Also, some people can only afford resale- period. It is not a lost sale for Disney as a certain percentage would not have bought direct anyway. By buying resale, that consumer is still bringing $$ into the park via tickets, food, etc. From the short time I have watched the market, the direct prices have increased at a faster rate than resale. Will the resale market catch up so the difference is not as large??

Someone did post that AKL, SSR, & BLT have the largest foreclosures. I have seen that to be the case according to the OCC website. Perhaps because Disney acquires more points back via foreclosure & does not have the need to ROFR as many? At least for AKL & SSR they are larger resorts with more points available? DVC has inventory of AKL so less ROFR? All contributing to price difference of direct vs. resale? Those resorts have the largest price difference between direct vs. resale.

Disney needs the resale market to obtain points back via ROFR so they can sell old resorts as there is still a demand for them. Sure, if they eliminated the resale market, they could obtain more points back via foreclosure but does Disney really want to go through the hassle of an increase in foreclosures or having to take back every contract vs. pick & choose via ROFR???

Also, some people can only afford resale- period. It is not a lost sale for Disney as a certain percentage would not have bought direct anyway. By buying resale, that consumer is still bringing $$ into the park via tickets, food, etc. From the short time I have watched the market, the direct prices have increased at a faster rate than resale. Will the resale market catch up so the difference is not as large??

Someone did post that AKL, SSR, & BLT have the largest foreclosures. I have seen that to be the case according to the OCC website. Perhaps because Disney acquires more points back via foreclosure & does not have the need to ROFR as many? At least for AKL & SSR they are larger resorts with more points available? DVC has inventory of AKL so less ROFR? All contributing to price difference of direct vs. resale? Those resorts have the largest price difference between direct vs. resale.

Click to expand...

It should be pointed out that some people can only afford to buy direct. Those without cash in hand can easily sign on the dotted line with Disney and be an owner. Whether or not they can actually afford to keep up with their payments determines whether or not their contract will eventually end up as a foreclosure for Disney to re-acquire and re-sell.

Disney loses nothing, they profit all the payments including interest the owner did pay, and once payments stop they can turn around and sell the exact same product at a higher price.

Disney is not practicing ROFR nearly as much at those resorts (I mean, why bother?) and therefore the resale/direct divide is growing larger and larger with every direct price hike.

Also, some people can only afford resale- period. It is not a lost sale for Disney as a certain percentage would not have bought direct anyway. By buying resale, that consumer is still bringing $$ into the park via tickets, food, etc. From the short time I have watched the market, the direct prices have increased at a faster rate than resale. Will the resale market catch up so the difference is not as large?

Click to expand...

That is exactly why we went resale! The difference between resale vs direct was $8400! We can pay out of pocket for the resale upfront costs. We would have had to finance direct. That is something we did not want to do. I think everyone needs to do what is best for themselves!

That is an unusual definition of the word afford! i would suggest if you don't have the cash to buy and need to finance then it is something you cannot afford!

Click to expand...

Well, by that definition, most cannot afford their houses.

Yes, I recognize that DVC is essentially a partially prepaid vacation so I'm comparing apples and oranges.

IMHO, there are 2 basic reasons most WDW guests join DVC. Sometimes only one applies and sometimes one is much more important than the other. It depends on the individual.

First, they want to be a member of the "club". Like so many clubs, you can't really put a price on this. For this motivation, I respectfully submit there is some justification to finance. It's not up to me to decide how much someone values club membership.

Second, they want to save on their annual WDW vacations, or at least upgrade to a better resort at a similar cost. For this motivation, IMHO, financing makes no sense. Having run the numbers a few times, financing pretty much eliminates any possible financial savings achieved through DVC while tying up valuable capital and/or credit.

If your primary motivation is to become a DVC member is the membership itself, then "afford" means one thing. However, if your primary motivation is to save money, then "afford" means something different.

Buying direct gives people a chance to finance; a chance they might not have when buying resale. In this sense, buying direct is they only way they can "afford" DVC.

That is an unusual definition of the word afford! i would suggest if you don't have the cash to buy and need to finance then it is something you cannot afford!

Click to expand...

This is precisely what I was insinuating to the poster saying many can only afford resale. I would love to see the % of direct buyers that pay cash. I would bet it's a lot smaller than those that buy direct and finance. My point is that ANYONE can "afford" to buy through Disney. But whether or not they should finance to do so is a personal decision.

Also, some people can only afford resale- period. It is not a lost sale for Disney as a certain percentage would not have bought direct anyway. By buying resale, that consumer is still bringing $$ into the park via tickets, food, etc. From the short time I have watched the market, the direct prices have increased at a faster rate than resale. Will the resale market catch up so the difference is not as large??

Click to expand...

We've seen this point made a number of times, but it's not a valid point. Disney Vacation Development (the DVC arm of the Disney Corporation) is responsible for and judged by the money they make by selling DVC points. What is good for the company is good for the company, but it might have little effect on them. Furthermore, a resale buyer is not an additional customer to Disney World, it is replacing an existing customer. Many times people choose to sell their DVC because they stop going to Disney. In that case someone simply steps in and takes their place, but it is a net zero effect for Disney.

Someone did post that AKL, SSR, & BLT have the largest foreclosures. I have seen that to be the case according to the OCC website. Perhaps because Disney acquires more points back via foreclosure & does not have the need to ROFR as many? At least for AKL & SSR they are larger resorts with more points available? DVC has inventory of AKL so less ROFR? All contributing to price difference of direct vs. resale? Those resorts have the largest price difference between direct vs. resale.

Click to expand...

I think you're missing the connection here. The foreclosure rates on these resorts are the highest because the prices on these resorts are the highest (excluding Aulani because that is a completely different situation). People get to WDW, get smothered in Pixie Dust and go home and realize that they have a $300 a month timeshare payment that they can't really afford. I've said it before, I don't really have a problem if someone chooses to buy direct, as long as it is an informed choice. But many who buy are uninformed (I would actually suggest that most who buy are uninformed) and at these prices, the stakes are significantly higher. What's interesting is that people see these numbers and not only are they not alarmed, but they think that it will not be them that this happens to. But a lot of times that is exactly what happens...to them.

It should be pointed out that some people can only afford to buy direct. Those without cash in hand can easily sign on the dotted line with Disney and be an owner. Whether or not they can actually afford to keep up with their payments determines whether or not their contract will eventually end up as a foreclosure for Disney to re-acquire and re-sell.

Click to expand...

I would suggest that there is a difference between being able to afford monthly finance payments for DVC and being able to afford DVC. Technically speaking, I could make the monthly payments on a new Ferrari. But let's be real, folks, I cannot afford a Ferrari.

Bill, you are often a very nice poster, but this is just insulting. I do not think people who buy direct are a joke to anyone. It is the people that buy direct that provide all the revenue to grow and improve DVC. Do you want to see new DVC resorts? Stop calling direct buyers idiots (which is what you are implying with such a statement). I can assure you I am no ones fool and I am buying direct. To imply that Disney somehow duped me into this decision is more then just a little condescending.

Click to expand...

With all due respect, I am not calling anyone an idiot, we have purchased direct in the past. You may have not been duped but I assure you that many may have.

We look at Disney as a magical place, the reality is, Disney looks at us as a revenue source with teams of people working to maximize our spending. That's OK, that's what businesses do.

Many don't know that resale exists or that Disney restricted resales to manipulate the market. They don't realize that all of the DVC worldwide vacation destinations may be an expensive use of points or that the RCI offerings that DVC advertises is less than 10% of what's offered to others.

DVC can be a cost saver for some and an expensive decision for others. Everyone has the right to spend their money anyway they want, all I try to do is to let people know that they may be a less expensive way to take a Disney vacation. That may include a DVC ownership, it may not depending on individual circumstances, needs, and wants.

With all due respect, I am not calling anyone an idiot, we have purchased direct in the past. You may have not been duped but I assure you that many may have.

Bill

Click to expand...

Bill, for what it is worth, I already acknowledged my over sensitivity to your first comment. That was my over reaction.

However, on a more serious point, in virtually every industry we have entered the age of the "informed consumer". From medicine, to cars, to phones, to dining, to hotels, etc, people, in mass, have turned to the Internet to make more informed decisions and take ownership of their own research. I am in retail and this is my reality every day. I have people check a price of a $10 item while standing in my store everyday. Consumers across the board are getting smarter. Almost every industry is responding to this reality.

If timeshare companies believe they are immune to this global trend and their entire business is built on keeping their customer uninformed, they are in big trouble. No other industry is making that plan work. Everyone else is having to build real value into their products or die.

Every company is going to try and make money and Disney is one of the biggest . My family and I took 3yrs to decide to invest into something like the DVC and we are buying small contracts to start and we will add on if we have too we are also buying direct it is the best option for us and we feel more comfortable doing it this way ( I know it's not for everybody). I am also in retail as is my DH I work in a giant supermarket chain and they have tricks everyday to try and get the consumer to buy their product it's no different for Disney.

Bill, for what it is worth, I already acknowledged my over sensitivity to your first comment. That was my over reaction.

However, on a more serious point, in virtually every industry we have entered the age of the "informed consumer". From medicine, to cars, to phones, to dining, to hotels, etc, people, in mass, have turned to the Internet to make more informed decisions and take ownership of their own research. I am in retail and this is my reality every day. I have people check a price of a $10 item while standing in my store everyday. Consumers across the board are getting smarter. Almost every industry is responding to this reality.

If timeshare companies believe they are immune to this global trend and their entire business is built on keeping their customer uninformed, they are in big trouble. No other industry is making that plan work. Everyone else is having to build real value into their products or die.

Click to expand...

I agree to a point. They know that some of their prospects are informed buyers. Much of the DVC info is not made public, so buyers can't read things like the POS before buying and I bet that many never read it after they bought. ASA's spend time pre-qualifying prospects before they let them schedule a sales meeting and at the meeting only positives are discussed. Disney spends hours and hours training the Guides on what to say and do, buyers don't receive training on buying a DVC interest.

Reading years of posts here on the DIS you can get a feeling of the DVC knowledge base. Posts like "our salesman was nice so we bought" and "we never intended to buy but after being told that we can use our membership to vacation all around the world, we were sold". The Disney sales offer has a 3 day limitation for two reasons, a hot prospect is more likely to close and they don't want you to take the time to become educated. Less than 1% of DVC owners post on the DIS, no idea how many read without posting.

Over the years talking to other owners really can open your eyes. We met a couple that didn't know what banking and borrowing are, they don't use the internet and went for many years letting their points expire because they felt like staying home. I tried to explain that they can bank their points and their reply was that it seems too complicated.

With all due respect, I think that this is lazy analysis. You are getting the 2012 points because in most cases you are still in the 2012 use year. That is not a bonus. Also, there are plenty of good resale contracts out there that have full points. Yes, we are seeing more stripped contracts on the market, but it is not that difficult to find a contract with full 2012 and 2013 points, and even sometimes banked 2011 points. The opportunities for savings are substantial, I think you are too quick in dismissing them.

Click to expand...

I am just giving other side of story, I have bought a dozen of resale contract last month, waiting for ROFR or closing. In last few weeks, asking price on resale has skyrocket and many other are stripped, so not a big difference on those cases, yes you can get a deal it will take time.

The history I reviewed was what people were paying when a resort opened to what the resale market looked like 10 years later. It appeared, fairly consistently, the people that purchased a resort early did ok if they held about 10 years. By ok, I mean they did not take huge losses. That was my only point. Buying a new resort direct at opening, to date, has done ok for people although most comments on this board would lead people to believe buying direct was a financial disaster all the time.

Click to expand...

Those who bought VGC direct could sell it now for a profit and have already vacationed. It didn't take 10 years for it to have been a good decision.
The same will hold true for Aulani, IMHO.

I am just giving other side of story, I have bought a dozen of resale contract last month, waiting for ROFR or closing. In last few weeks, asking price on resale has skyrocket and many other are stripped, so not a big difference on those cases, yes you can get a deal it will take time.

Click to expand...

So I'm understanding you correctly, you bought 12 resale contracts last month?